Latest update on lease extension reforms 2025

Leasehold reforms in the past year

As we approach the one-year anniversary of Matthew Pennycook’s ministerial statement on leasehold reforms, it’s an opportune moment to assess how far the Government has progressed implementing the Leasehold and Freehold Reform Act  2024 and, in particular, the specific package of lease extension reforms it outlined. This is part of a look at the reforms as a whole, having previously written specifically about marriage value and when it will be abolished.

What has and hasn't happened with lease extension reforms in 2025

In his statement on 21 November 2024, Matthew Pennycook set out a roadmap for implementing the new Act via secondary legislation, with many flat owners waiting on real change in order to sell their flats with reduced cost lease extensions. The plan included several steps. including:

• Introducing new rights around lease extension and collective enfranchisement.

• Consulting on reforms to service charges, legal costs and valuation rates for enfranchisement.

• Publishing a draft new Bill to tackle outstanding issues in the Act.

Has there been any progress or legal changes?

Right to Manage reforms

One clear victory: the increase of the non-residential element threshold to 50% for the right to manage claims and the removal of landlords recoverable costs (in most cases) took effect on 3 March 2025. This means leaseholders have broadened access to the right to manage and in most cases, no freeholder legal bills to pay. The impact of this on the ground is that fewer claims are being contested on technical grounds, as freeholders now have to fund this sort of game-playing out of their own pockets. A significant win for leaseholders.

Removal of the two year rule for lease extensions

A leaseholder no longer has to have been the registered owner for two years. This opens up the option of a buyer extending the lease as soon as they own the flat, which liberates the market and means there is less of an incentive on freeholders to disrupt claims in the hope it resets the clock by two years. For guidance on lease extensions generally, head to our lease extension guide.

Commonhold white paper

In March 2025 the Government published the White Paper on commonhold reform, which proposed making commonhold the default tenure and laid the groundwork for future reforms of leasehold tenure.

Insurance commissions ban consultation

The Government consulted from December 2024 (closing 24 Feb 2025) on banning building-insurance commissions for landlords, managing agents and freeholders, under the Act’s new provisions. The work on this is ongoing.

Service charges consultation

The consultation on service charges and legal costs closed on 26 September 2025, engaging building managers, freeholders and leaseholders alike on how these measures should be implemented. We wait to see what real changes can be expected following the consultation.

The elephant in the room: deferment rates & marriage value

A major sticking point in the reform package has been the promised consultation on valuation rules and, more importantly, the question of abolishing marriage value, a which forms a significant chunk of the premium payable when leaseholders extend a lease or enfranchise the freehold if the lease has less than 80 years.

The consultation on capitalisation and deferment rates has not yet been launched. The Government has made clear it will await the outcome of the ongoing judicial review challenge before progressing. That means the consultations on valuation rates (and the impact on marriage value) are postponed indefinitely.

Solicitor Ricky Coleman of Peppercorn Law comments:

The draft Leasehold and Commonhold Reform Bill

The Government’s roadmap also promised that a Draft Leasehold and Commonhold Reform Bill would be published in the second half of 2025. At the time of writing, the Bill has still not appeared.

Given the unresolved human rights case (with the decision due any day now) and valuation issues, it seems unlikely the Bill will land until after the judicial review outcome.

What this means for leaseholders

For leaseholders, the picture is a mixed one. On one hand, progress has been made with consultations and some changes to Right to Manage claims, along with the removal of the totally pointless two-year rule. On the other, major reforms including the abolition or reduction of marriage value, capping onerous ground rents and removal of landlords costs for enfranchisement claims, remain stalled.

This leaves many in a state of uncertainty as to when meaningful implementation of lease extension reforms will take place. The worst thing about this issue is that lease extension and freehold premiums continue to increase under current rules, as leases shorten and property values rise. In addition, legal and valuation costs of landlords have increased significantly, along similar lines to inflation generally, which was in double digits recently.

In practical terms many are having to proceed with these transactions out of necessary, and paying more than would have been the case back in 2021 when the reforms first made headlines. If you can no longer wait, read up on our fixed fee lease extension service here.

Judicial Review challenge is unsuccessful

The judicial review of some of the key parts of the Leasehold and Freehold Reform Act 2024 has ended in defeat for the wealthy freeholder lobby, and the government is now clear to press on with changes to the law. We now await the promised secondary legislation needed to bring in the key provisions within LAFRA.

An appeal of the judicial review is possible however the judgment was comprehensive and in the view of many leading voices in this area, not easily open to challenge.

So, have things improved for leaseholders?

Overall, the Government deserves credit for following through on commitments such as consultations and the right to manage changes. But when measured against the great promise of leasehold reform, especially the more substantive structural change surrounding marriage value, the pace has been slower than many hoped.